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2014 (6) TMI 781 - HC - Companies LawAuction sale held during winding up of company - Validity of transfer of right - Objection on Deed of conveyance made in favour of applicant - Held that:- The advertisement was misleading and the applicant having been mislead into believing that the transaction was an outright sale, had proceeded in that fashion. As already pointed out, the lease cum sale agreement executed in favour of the company in liquidation had long expired, which would indicate that it was for the KIADB either to call upon the lessee to complete the sale transaction by paying amounts due under the agreement or to terminate the lease if there was default on the part of the lessee. There was also no clause found in the lease cum sale agreement which would determine the lease as would be the case provided for under Section 111 of the Transfer of Property Act, 1882. In other words, when the company in liquidation was ordered to be wound up by operation of law, the lease would be determined in the event there was a clause in the lease deed, which indicated that the lease would stand determined in the event of the lessee being declared insolvent or going into liquidation. In the absence of any such clause and in the absence of further act on the part of the KIADB to terminate the lease, the lease transaction was in limbo. In that, the only obligation that was outstanding was in terms of clauses 7 and 8 of the lease deed, which required the lessee to execute the sale deed if all other obligations on the part of the lessee had been completed. Apparently, since there is no indication that there was any default in the payment of the lease rent by the lessee, the only obligation that was outstanding on the part of the KIADB was the execution of the sale deed. And the lease hold rights, which were capable of being transferred as on the date of the order, was on a misrepresentation made by the KIADB and this court has overlooked the obvious that the lease deed was not current as on the date of the order and there were no lease hold rights that could be taken over, except the position that had continued with the company in liquidation as on the date of the order and further right to obtain a sale deed pursuant to the lease cum sale agreement. Therefore, the applicant having been considered as the successful bidder and the applicant having complied with such further directions as regards payment of monies, as already stated and this court having affirmed the sale, it is not open for the KIADB to resile and claim that the advertisement issued in respect of the lease cum sale was faulty and was incomplete and therefore, void. It is a bona fide purchaser for value, in that, the advertisement issued with the leave of this court indicated that the property was being auctioned on 'as is where is basis', though it was subject matter of lease cum sale agreement dated 12.3.1973, for a period of 11 years. It would give the impression that the company in liquidation had acquired rights over the property by the time the advertisement was issued. The applicant thereafter having participated and paid substantial amount towards the bid amount and having been lead to believe that it had purchased the property absolutely, being denied the same, on the footing that there was a lapse on the part of the Official Liquidator in not incorporating the condition that the sale was only in respect of the lease hold rights, which in any event, were not available as on the date of the sale, since the lease had long expired, the objection raised by the KIADB to deny the sale transaction and to refuse the execution of the Deed of Conveyance in favour of the applicant is unjust and cannot be sustained. - Decided in favour of appellants.
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